GUANGZHOU, China — A region in China known as Inner Mongolia is planning to ban new cryptocurrency mining projects and shut down all current activity. This is an act by the government to curtail energy-consumption.
Bitcoin is what’s called a ‘decentralized currency.’ This means that bitcoin is not issued by a single entity like a central bank issues cash. Instead, transactions are recorded on a public ledger called the blockchain. These transactions are verified by miners.
These Chinese miners run ASICS (purpose-built computer chips) to solve complex equations that let a bitcoin transaction take place. For doing so, the miners receive bitcoin as a reward. That’s the incentive.
These computers and custom chips use a lot of electricity to make this happen.
All in all, bitcoin mining consumes around 128.84 terawatt-hours of energy every year. That is more than the entire energy budget for small countries like Ukraine and Argentina.
China accounts for roughly 65% of all that bitcoin mining energy. The Inner Mongolia region itself accounts for 8% of this global energy figure due to its low-cost energy. In contrast, all of the United States only accounts for 7.2% of global bitcoin mining.